Compass Point Downgrades Circle Internet to Sell After US Stablecoin Legislation

Compass Point downgraded Circle Internet Group (CRCL) from Neutral to Sell and lowered its price target from $205 to $130 following the signing of the GENIUS Act by President Donald Trump, which regulates stablecoins. While the legislation is positive for the crypto industry and USDC is expected to remain integral to the financial system, the firm is cautious about Circle's long-term economic prospects given its $53 billion valuation. The analyst highlighted that investors might 'sell the news' after the legislation, causing a potential retracement in Circle's recent rally of nearly 600% since June. Additional competitive pressures are anticipated as mainstream fintechs and banks plan to launch competing stablecoins in the second half of 2025. Furthermore, the limited number of blockchain integrations available to Circle may cap future income streams, normalizing revenue lower by 2026. Despite the downgrade, Circle is expected to expand its distribution network and increase the share of interest income to adapt to the evolving regulatory environment.